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R3: REQUIRED RETAIL READING

June 7, 2010

WMT’s Apparel comments good for everyone. If today’s downgrade of NKE by Citi rocks either Nike or FL, we like the other side.

 LEVINE’S LOW DOWN 

- Wal-Mart's Downplays Apparel - WMT claimed that apparel was a small portion of their overall business and a work in progress. Wal-Mart asserted they are going back to basics, as in business basics and the product itself. Socks, underwear, jeans, and T-shirts are their sweet spot. Apparel is important only “because it completes the trip,” Castro-Wright commented. “If you’re buying groceries and consumables and can pick up [soft goods], that’s the model we’re using to enrich the [product] mix and the overall basket.” WMT maintained that they are not a department store. <wwd.com/business-news>

Hedgeye Retail’s Take: This is good for everyone that sells apparel.

 

- A Harris Interactive poll suggests users of social media are heavily influenced by online reviews. According to the poll, social media influences 45% of adults and 50% of those aged 18-34. The results are staggering, especially when considering how much brands and companies spend themselves to influence purchase decisions. Once again it seems like peers and friends are amongst the biggest influencers in retail.

 

- Brace yourself for the next installment of the Twilight series to hit the big screen, Eclipse. In advance of the likely-hit, Nordstrom is getting into the movie tie-in game with the launch of an exclusive line of Eclsipse apparel, ranging from $38-$50. The promotional calendar also calls for several in-store events. It looks like blockbuster movie promo’s are no longer relegated to collaborations with soft drink makers at Wal-Mart or McDonalds!

 

- With nail polish becoming the new lipstick, it was only a matter of time before a scented version hit the shelves. Revlon just released a line of scented nail polish for the summer that is now available in drugstores across the country. The scents include ocean breeze, beach, cotton candy, bubble gum, and peach. Word has it the product is hit so far, which has got to be a direct result of the product being so outrageous. Who’s smelling their finger nails on a regular basis?

MORNING NEWS 

Chinese Footwear Brands Making Inroad to US - Taking inspiration from heritage brands in the People’s Republic of China, young entrepreneurs are bringing classic Chinese looks to U.S. customers — and finding space in the hippest shops. At this fall’s trend-focused Compass sneaker trade show in New York, at least four brands with Chinese roots showed up to hawk their casual canvas kicks, including Warrior Footwear, Shulong Shoes, Ospop and The People’s Shoe. In addition, Feiyue, a French revival of a Chinese brand, has scored A-list retail accounts, such as Odin in New York and American Rag, and been photographed on the feet of Orlando Bloom.  <wwd.com/footwear-news>

Hedgeye Retail’s Take: We noted this about six months ago as a major risk for the US footwear industry. This is not a question of ‘if’ the Chinese brands make inroads, but when. It sounds like sooner than later. We’re more concerned for incumbents on the fashion side.

Hockey and Yoga Top Participation Growth in 2009 - Hockey and yoga were the two fastest growing sports in terms of participation last year, according to the National Sporting Goods Association (NSGA). Participation in hockey grew 60.0% while participation in yoga, which grew 21.9% in 2008, grew 20.9%. Participation in most fitness activities, including camping, hiking, XC skiing, alpine skiing and snowboarding rose, while participation in all team sports except hockey and soccer declined. <sportsonesource.com>

Hedgeye Retail’s Take: Yoga comes as no surprise, but hockey up 60%? That’s so big it makes me question the validity of the numbers. Then again, one trend that has been gaining remarkable momentum is girl’s hockey in the US. Score 1 for girl power.

BRC warns Government against increasing VAT - The British Retail Consortium has called on the Government to focus on public spending cuts rather than tax rises in order to tackle the deficit, reiterating its belief that VAT should not be increased. <drapersonline.com>

Hedgeye Retail’s Take: More posturing. But limiting VAT increase has a decent shot in the current economic climate in Europe.

Adidas and Slam Magazine Pair for Apparel Line - This holiday season, Adidas will launch an apparel line, featuring cover art from world basketball magazine Slam. Adidas, in partnership with Source Interlink, will design apparel, headwear, footwear and accessories—all to feature iconic covers and photographs from Slam's archives. The line will hit select retailers for holiday 2010.Besides the Adidas/Slam collection, the companies will also launch the brand identities of Slam and Surfer magazines in a range of apparel, headwear, footwear and accessories. These lines will also be available by holiday. <licensemag.com>

Hedgeye Retail’s Take: Makes sense for Adidas – a perennial top performer in sports apparel.